Proposed Income Tax Law In Md.

January 24, 1935

Adoption Of It Would Make State 27th To Pass Such Legislation

Should the income tax measure now being advocated by the Maryland Farm Bureau and the State Grange be enacted into law at the present session of the Legislature, Maryland will be the 27th State in the Union to adopt such legislation. Wisconsin led all other States in modern income tax legislation, passing such a tax in 1911.

From the summarized report covering a recent study made of the Maryland tax field at the instance of the two farm organizations, the prospective annual yield from a State income tax in Maryland is estimated at from $1,286,727 to $4,351,822, depending on the rates imposed and whether dividends from corporations are included.

In arriving at reasonable bases of comparison, the prevailing income tax rates in the three neighboring States of Delaware, Virginia and North Carolina were used. Delaware’s tax rate is one per cent on the first $3,000 of income; two per cent on the next $7,000, and three per cent on incomes in excess of $10,000. The yield from such a tax as Governor Nice has proposed, applying half the federal rate, would yield approximately $9,000,000,000. This proposal would affect both individuals and corporations.

In commenting on its practicability, the tax experts who had prepared the Grange and Farm Bureau report, acknowledged that “while the revenue from a net income tax is irregular and falls on a rather selective and small group of individuals, these arguments do not constitute sufficient weight to outlaw an income tax from the Maryland tax system. Despite the fact that such a tax would not provide an adequate source of revenue to take care of an emergency situation, such as unemployment relief, there is need for such a tax as a permanent feature in a comprehensive and equitable tax system for Maryland.”

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